The Weekend Wonk: Trump’s Doomed War on Renewable Energy

March 10, 2018

We are now putting solutions to climate change in place – despite hostility from the top of the US administration.
It is too late for the fossil fuel industry to stop inevitable technological change – although they can eat away at America’s technological leadership, and slow the global transition – which of course is the common ground between Vladimir Putin and the fossil fuel dominated Trump administration.

Energy Secretary Rick Perry’s proposal to force electricity customers to subsidize ailing coal plants ran aground early this year. The Senate rebuffed efforts to water down tax credits for solar and wind power. And Trump’s move this week to impose a tariff on imported solar panels should put only a crimp in the growth of sun-powered energy, analysts have said, despite the outcry it’s generated from most of the U.S. solar industry.

Trump spent his campaign promoting an “America First” energy policy that translated to more oil, gas and especially coal — even as he slammed solar as expensive and hammered wind turbines as ugly. But after growing rapidly during the Obama years, wind and solar energy may have come too far for even a pro-fossil-fuel administration to stuff back into the barrel — especially after creating tens of thousands of jobs in red and blue states alike.

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The solar tariff, along with a trade case on washing machines, gave Trump his first opportunity to implement protectionist trade policies while targeting his preferred adversary, China. It also demonstrated the way such cases can split both political parties and the industry that the trade penalties would affect.

Administration officials sold the solar tariffs, which were opposed by most of the domestic solar industry, as an effort to preserve national security. While Sen. Ron Wyden (D-Ore.), normally an environmentalist, wanted strong tariffs to protect his home-state manufacturer SolarWorld, Sens. Thom Tillis (R-N.C.) and Lindsey Graham (R-S.C.) both opposed the tariffs as potentially damaging to companies that make components for solar systems.

“It was not as bad as we expected,” Tillis said Tuesday of Monday’s tariff decision. “We were glad that the extreme scenarios that were being floated didn’t occur. Now, we’re just trying to figure out structurally how this really affects what has really become a very successful industry.”

The solar industry now employs 260,000 people and has become one of the fastest-growing energy sectors. Together, wind and solar power make up most of the new power capacity added to the U.S. grid in recent years. The Solar Energy Industries Association says the tariffs imposed Monday will cost the industry 23,000 jobs, but even CEO Abigail Ross Hopper said the 30 percent tariff was not as bad as it could have been, since Trump could have imposed a 50 percent tariff.

“I think this administration really grappled with the understanding that solar is creating more jobs in this economy than many other industries and many other energy sources,” Hopper told reporters. “This decision, while we’re not happy with it … does demonstrate some restraint, understanding that this impact is going to affect jobs and growth in the U.S.”

Since solar cells and panels make up only a fraction of a new solar system’s costs, analysts expect the tariffs to bump up overall installed prices by 6 percent for residential rooftops and about 10 percent for utility-scale plants. Rocky Mountain Institute’s own analysis says that the ongoing decline in solar installation costs will wipe out the price increases from the tariff in 18 months.

Oil Giant BP recently revised its projections for peak gasoline demand from 2040s to 2030s, indicating that even those with greatest investment in a fossil future have had to bow to emerging reality.Bloomberg:

The company forecasts the abundance of gasoline and diesel cars will ensure overall oil demand will continue to grow at about 0.5 percent per year. But that’s slower than the 0.7 percent annual increase it forecast last year. Consumption is expected to peak at 110 million barrels per day in the mid-2030s, BP’s Chief Economist Spencer Dale said. That’s earlier than the mid-2040s he predicted last year.

Meanwhile, emerging battery technology is an unforeseen black swan that is upending projections that seemed current and credible just 2 years ago.

True enough, the carbon-burning economy has been declared to be on its death bed umpteenth times before. But this came with a time frame related to the ultimate killer: the battery. The Federal Energy Regulatory Commission ruled that so-called energy-storage companies such as Tesla Inc. and AES Corp. can compete against traditional power plants in U.S. wholesale markets by the end of 2020.

“This is a watershed event,” said Joel Eisen, an energy law professor at the University of Richmond, not unlike the time when regulators opened up the telecommunications market in the 1970s with rulings that ushered in the digital age by giving computers fair access to phone lines.

Batteries, once relegated to powering small devices like remote controls and watches, are now poised to energize the things most central to daily life, from smartphones to cars to entire homes and offices. And Big Oil’s taken notice. At CERAWeek by IHS Markit — an annual conference that has drawn some of the largest names in the world of fossil fuels to Houston this week — executives met to talk batteries, not once, but twice.

“The question is no longer if batteries will disrupt the power sector,” IHS wrote in a description of one of the discussions, “but rather how much and how fast?” (If it’s any indication of how the industry itself feels about this, the first of these sessions was held across the street from the actual conference, at a restaurant, and it was still packed.

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Now the batteries’ advance into power markets threatens the reign of natural gas, which at the moment generates about a third of U.S. electricity. In California and Arizona, utilities including PG&E Corp. and Pinnacle West Capital Corp. are abandoning gas plants in favor of renewable energy projects. These solar and wind farms can now use energy storage systems to stash their power and unleash it as needed.

“Batteries are like bacon,” Vibhu Kaushik, director of grid technology and modernization at utility Southern California Edison, said at CERAWeek. “They just make everything better.”

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The Brattle Group has estimated that the energy commission’s recent ruling couldhelp unleash as much as 50 gigawatts of battery-stored power into U.S. markets, enough to light up 6 million homes. Over the next five years, growth in energy storage will be “more exponential, than linear,” said Alexandra Goodson, who works for the battery maker Saft.

Meanwhile – pushing a “drill Baby Drill” agenda not a slam dunk, even in Red States.

Facing mounting pressure from fellow Republicans who see little consistuent support for drilling off the Atlantic coast, Interior Secretary Ryan Zinke could be backpedaling on the Trump administration’s initial plans to expand the program, GOP lawmakers told McClatchy.

In a meeting with affected coastal GOP representatives last week, Zinke reaffirmed an exemption from the drilling for Florida, hinted to New Jersey officials their state was likely to be spared and left a Virginia congressman optimistic the policy would be overturned for his state, too. And Zinke said he’d travel to South Carolina to get a better sense of their concerns as well.

If Zinke carves out exceptions for all these states, the idea of cross-Atlantic oil drilling could be dead.

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Lawmakers from Florida emerged from that recent meeting convinced they were still going to get their exemption, citing a united delegation and a longstanding federal moratorium on drilling in the eastern Gulf of Mexico.

New Jersey Republicans said Zinke, a former Montana congressman, strongly implied their coast would be spared, too, because some studies suggested drilling there would not yield much oil.

Rep. Scott Taylor, R-Va., said he was confident his state would get an exemption because of tourism and the Navy’s concerns about drilling near a military base.

And Rep. Tom Rice, R-S.C., said he was encouraged both by Zinke’s promise to visit the South Carolina coast and his indication “to me that strong resistance (inside the state) will certainly be taken into account.”

Rep. Mark Sanford, R-S.C., another coastal representative and drilling opponent, said every Republican at the Feb. 27 meeting expressed similar sentiments.

In other words, every state that wants an exemption is arguing its circumstances are special, but they all share similarities that would make it difficult for Zinke to pull out of one locality but not another and still maintain credibility.